2.9 billion is a big number.
That’s how much money is estimated to be lost by the government by not collecting taxes on employer health benefits.
The Trudeau Liberals hope to change that, however, as reports say they have their eyes set on the new tax as an extra source of revenue.
Darren Chapman, a professor of economics at Fanshawe College, doesn’t think the motivation for this decision is hard to figure out.
“They’re taking it as a money grab. That’s the long and the short of it,” Chapman says. “They’re looking at ways to raise revenue, and this is an opportunity for them to tax a service that currently isn’t being taxed.”
But is it worth the impact on the quality of health for Canadians?
Chapman isn’t convinced.
“It doesn’t seem like it’s a well thought out decision right now,” says Chapman. “If anything I might suggest it’s a trial balloon, but I hope its not. It doesn’t make good economic sense to tax health.”
The benefits that currently exist finance a host of costs not covered by provincial health insurance.
This includes preventive care, prescription drugs, mental health services, dental care, and musculoskeletal care.
Chapman isn’t convinced the benefits outweigh the cost when it comes to limiting the choice of Canadians entering the healthcare system rather than taking preventative methods.
“I would say it’s not a smart move because essentially what’s going to happen is that people will think twice preventative maintenance and preventative healthcare,” Chapman says.
The industries that provide these services are also voicing concern.
A coalition of 9 agencies including the Canadian Dental Association, Canadian Chiropractic Association, and the Canadian Association of Optometrists are speaking out in condemnation of the action.
The organizations have formed a website to give Canadians a chance to voice concerns to their MP.
While the decision is far from formulated and is simply in discussion, opposition is quickly moving in to get the public informed.
Taxing health benefits isn’t a new strategy, though.
Quebec’s provincial government has already attempted it.
When implemented in 2014, 20% of large companies stopped offering benefits to their employees.
Half of small businesses did the same.
Currently, it’s estimated that 75% of working Canadians, or 22 million people, have access to these benefits.
How that number would change if the plan is put in place is anyone’s guess.
